Real Estate Property News Update 2012

Latest Property news June 2012 - A quick update on the proposed guidelines to be implemented for foreign property purchase.

The following information is obtained from the Bulletin Mutiara and verbal checks with the Penang state authority :

From 1st July 2012 - The minimum limit of condo purchase will be raised to RM1 million and landed properties to RM 2 million BUT :

a) The MM2H participants are still allowed to purchase at RM500,000 threshold and limited to 2 purchases;

b) Those holding Permanent Residence can purchase at RM250,000 and above; and

c) Transfers pursuant to distribution of Estate of deceased persons are not affected.

d) Commercial with strata title at the price of RM1 million property. However a foreigner to purchase commercial landed property at RM1 million at main land and RM2 million at Penang Island.

GEORGE TOWN (April 19, 2012)

Penang to prioritise local house buyers

In a bid to ensure that locals are not priced out of owning property in Penang, the state government has proposed to increase the floor price of property for foreign buyers from RM500,000 to RM1 million. This applies to all types of property in the state. In addition, foreigners who wish to own landed property on the island will have to meet a RM2 million minimum purchase price. Penang Chief Minister Lim Guan Eng said today the move is expected to be implemented by July 1 2012 at the latest. “This is a first step to protect the interests of locals. It is to give priority to our own residents,” he told a press conference prior to attending the screening of a documentary on urbanization. The move by the state administration comes on the heels of reports that the federal government is also considering a similar move to control rising property prices. The decision was reportedly “in the pipeline” and would be implemented by the Prime Minister Department’s economic planning unit. In his opening speech earlier, Lim noted that of the 774 and 890 property transactions done in 2010 and 2011 respectively, only 2.98% and 2.26% were by foreigners." However, to ensure that locals enjoy priority for less expensive properties, this restriction will help to provide a level playing field since foreigners have the advantage of a higher currency,” he said. In an immediate response, National House Buyers Association deputy president Brig-Gen (Rtd) Datuk Goh Seng Toh lauded the proposal. “It is an excellent move, otherwise foreigners who have a lot of cash will swamp the (property) market and locals will lose out,” he said when contacted. Real Estate and Housing Developers Association Penang chapter chairman Datuk Jerry Chan said it is a drastic move but he understood the reason behind it. Nonetheless, he said the RM2 million requirement is necessary, noting that many properties in the George Town Unesco heritage zone had been bought by foreigners. "I think that this is less restrictive and onerous on foreign buyers because it is just a cap level and not an imposition of a high stamp duty,” he said.

Source: The Sun, Aaron Ngui

CIMB Research Report.

The price of homes expected to advance 5% to 10% this year 2012

PETALING JAYA : Overall price appreciation for residential properties is expected to range between 5% and 10% this year, according to CIMB Research.

In a report, the research unit said residential properties' price appreciation could be even higher but it believed that the Government would continue to remain vigilant on “runaway” property prices. CIMB Research said in terms of house price appreciation, despite the slower real GDP (gross domestic product) growth projection of 3.8% compared with 5.1% in 2011, it believed that 2012 would be another good year due to several factors. “Buying momentum continued to be strong, driven by inflationary fears." Supply growth should remain depressed as developers have only just started to focus more on affordable homes costing not more than RM500,000 in the Klang Valley." Major infrastructure improvements in the Klang Valley such as the MRT (My Rapid Transit), River Rehabilitation and covered walkway projects will help boost property prices.” CIMB Research said although the residential property market would continue to set new records in 2012, it was expected that there would be a slowdown in the increase in overall transaction values in 2012 after two years of high growth that averaged around 30%.“In view of credit-tightening measures by the central bank, we believe that the growth in transaction value should slow to 10% to 12% this year.” CIMB Research noted that in 2011, the growth of residential property supply in Malaysia fell to 1.5%, which was the lowest on record. The slowdown in supply growth was most pronounced in the big three markets (Johor, Penang and Klang Valley), which recorded an average growth of 1.2%.The only states to buck the slowing trend were Terengganu, Kelantan and Perlis. “If supply growth continues to lag behind population growth, house prices can only head in one direction. ”It was noted that major developers such as SP Setia Bhd, UEM Land Holdings Bhd, Mah Sing Group Bhd and UOA Development Bhd were all gunning for sales records this year and growth rates ranging from 10% to 35%.It was also pointed out that the risks to CIMB Research's volume and price projections for 2012 included the global economic outlook and the local stock market performance. However, CIMB Research is not optimistic about the commercial property market in the Klang Valley as oversupply will plague the sector for many years to come.

Source: The Star April 18, 2012 By THOMAS HUONG
 

BRICKS AND MORTAR BY TEH LIP KIM

REPORTS released in the last two to three weeks on the state of the property sector in Malaysia and other countries in this region should offer some comfort to both builders and investors. The Malaysian Property Market Report 2011 that is issued by the Valuation and Property Services Department of the Finance Ministry has painted a fairly positive picture. According to the report, the Malaysian property market saw its highest growth in the last five years. For instance, the number of transactions in 2011 was up 14% and the value of transactions in the same year rose 28% compared with the previous year.

Perhaps it is for this reason that sentiment remain upbeat not only among property investors in Malaysia but in other countries in this region as well, such as Indonesia, Singapore and Hong Kong. Also released just recently is the Asia Property Market Sentiment Report 2012 by iProperty.com, a network of property websites covering Malaysia, Indonesia, Singapore and Hong Kong. According to this report, 59.5% of those surveyed think that the Malaysian property market is still doing well, and 62.3% of them have expressed a desire to acquire new property within the next six to 12 months. That, certainly, is a show of confidence in the property market in Malaysia, and sweet music to developers' ears.

More numbers: of those surveyed, 28% have said that they were looking to buy for investment. But then again, some may ask, is it all that great? Are those numbers for real? Even if they are, are we drawing the right conclusions, the perennial pessimist will ask. Given the scenario, we have reason to feel positive about the Malaysian property market. Not reported here or anywhere, but widely acknowledge and perhaps even fairly extensively practised is the purchasing of properties for the future generations. Parents monitor the prices of houses for the benefit of their children. Many who can afford it are already buying new homes for their children, out of fear that prices could rise to a level beyond their children's means if they wait for the children to grow up, find a job and start looking for a home on their own.

This practice now begs the question: if the children of this generation can't afford to buy their own homes, how then are their own children going to fare? But that is another issue. Looking at it from an investor's point of view, there is still a lot of upside in the property market, particularly in Malaysia.
The property market in Malaysia is still quite under-priced when compared with those in Indonesia, Hong Kong or our nearest neighbor Singapore. There are many family ties between Malaysia and Singapore and our cousins across the Causeway have more than occasionally envied us our property prices.
The fact that Singaporeans make up a large proportion of foreign property purchasers in Malaysia, particularly in Johor, is a case in point. Property developers are also increasingly eyeing markets outside Malaysia with many carrying out promotional efforts to attract buyers from China, Indonesia and of course Singapore. So long as property remains cheaper in Malaysia than in those countries, we will continue to be an attractive investment destination.

Even moves by the authorities to keep prices in check, such as one proposal to raise the floor price of property foreigners are allowed to buy, may not have the desired effect of preventing prices from rising. A recent report says that the government may decide to put in place new requirements for foreigners planning to invest in the property market in Malaysia by restricting them to properties valued at RM1mil and above. Currently, they are allowed to purchase any property valued at RM500,000 and above. This is not likely to have much impact as most property purchases by foreigners are in the RM1mil and above category anyway. In a buoyant market, this requirement may even encourage developers to raise prices to a level above RM1mil just to widen their target market to include foreigners. That would be one more way to keep prices going up.

On the whole, the economy is performing fairly well. Unemployment rate is about 3% while the inflation rate was at 2.2% in February. The Bursa Malaysia index hit a new high this month. Foreign direct investment has also risen by 12.3% to RM32.9bil in 2011 compared with the previous year. These are reasons to feel upbeat. If one needs an indicator on how good sentiments are, just count the number of new property launches since the beginning of this year. The three hotspots of Klang Valley, Penang and Johor Baru continue to command top prices as demand continues to focus on these three areas. Overall growth for the residential sector, according to the Malaysian Property Market Report, was 19%, with Selangor recording the highest for home transactions at 28%. Yes, there is reason to be optimistic. The challenge now is to ensure that we continue to enjoy sustained growth, but prices remain affordable for the vast majority of Malaysians. Most of all, we do not want the bubble to burst.
 

Source: The Star April 21, 2012 By Teh Lip Kim is the MD of SDB Properties Sdn Bhd, a lifestyle property company.

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Disclaimer The information provided are for information only and does not constitute a basis for any offer or contract of sale. No part of this document may be construed as a statement or representation of fact based on which a contract is created. Interested parties are advised to carry out their own independent investigation.